Hacker News Reader

Comment by hendzen | Hacker News Reader

I wonder how history will look back on Reid Hoffman's book, "Blitzscaling". The premise seems bit ridiculous now in light of recent problems at WeWork and Uber.

View on HN

It's always a good idea to be skeptical of someone making claims you need lots of capital to rapidly scale your business when that person is selling capital for a living.

You do need lots of capital to scale rapidly (I don't sell capital for a living).

If you're a company and want to expand you either use your profits, or borrow money, the more money you borrow, the more widget machines you can buy.

The open question is how big you should grow before demonstrating profitability.

well we're all sitting around here talking about WeWork and not the other million co-working spaces... so in way their plan worked.

I only hear about wework hear, via the media. If this was a penny stock, we'd call it a pump and dump scam.

I know tech people all over the US and Europe and literally no one has ever spoken the word 'wework' outloud to me.

I'd make the follow small modification to the parent's quote:

I's always a good idea to be skeptical of someone making claims you should raise lots of capital to rapidly scale your business today or in the near term, as opposed to other strategic alternatives when that person is selling capital for a living.

I don't disagree. You also need medicine when you're sick, but you go to a doctor and not a pharmaceutical salesman to get an independent opinion.

Lol. Ok, point well made :)

I mean Uber could have still executed the same playbook and fired executives who were guilty of sexual harassment, and WeWork could have executed the same playbook but without the personal appropriation of corporate opportunity.

Even if the execs stopped running around grabbing the secretary's butts and double dealing on sketchy real-estate deals with the company that wouldn't make their business models any better.

Uber is basically an international taxi company and we-work is a real-estate company. Neither of their business models are money printers to the degree required to justify their valuations. Sure, they have a chance of creating some network effect feedback loop that makes them insanely profitable but is that chance big enough to justify the valuation? The market seems to say no.

they're not profitable and never will be

Uber is THE taxi company and WeWork is THE co-working company. All over the US, and even outside of that.

A local taxi line might be worth a few million dollars. It's disingenuous to say that Uber is "just a taxi company" when you have their level of consumer loyalty and geographical control.

Consumers are playing Lyft and Uber off of each other and picking whichever one is cheaper (https://www.vox.com/2019/2/5/18210376/uber-lyft-ride-loyalty...), and Uber's network structure doesn't lend itself to geographic control (https://hbr.org/2019/01/why-some-platforms-thrive-and-others...)

I haven't read the book, but WeWork doesn't seem to fit the principles of Blitzscaling. They haven't been able to dominate their market (office space) in the same way that Google owns search or Airbnb owns home rentals. A quick search for "Reid Hoffman WeWork" returns no relevant results other than him investing in a possible competitor:

https://media.thinknum.com/articles/how-liquidspace-is-under...

They live by the policies, getting giant investments for a warchest and blowing it on possibly impossible to monetize locations with the hope that they will kill any competitor before one can take root. See how Uber subsidised new drivers and riders.

> They haven't been able to dominate their market (office space) in the same way that Google owns search or Airbnb owns home rentals.

I disagree. First of all, WeWork's market isn't really 'office space', it's short-term, flexible, furnished office space, and in the sense of "market domination" I think WeWork is very similar to AirBnB in that regard. That is, while they both have strong competitors who predate them (e.g. Expedia/VRBO and Booking.com both have huge short-term rental businesses), they both certainly lead in the "mindshare" of their particular markets.

The main difference is just that the economics of AirBnB's model (they neither own nor lease any real estate for rent) is much more profitable than WeWork's.

Airbnb owns the peer to peer market rental. WeWork isn’t even close to the size of regus. Airbnb can expand by dropping money into marketing. We work needs to do huge outlays to buy/lease buildings and also drop money into marketing to grow.

> WeWork isn’t even close to the size of Regus.

They both manage ~45 million sq feet of office space. Regus isn't chasing tech IPO valuations as they went public in 2000.

I haven't read the book but I struggle to take anyone behind LinkedIn particularly seriously... as someone who uses their recruiter product heavily, I'm not sure you could have designed a worse product from a functionality point of view.

Uber and WeWork are still major success stories.

Let's revisit this in 10 years

Reply on news.ycombinator.com